* Ferro molybdenum spot price at around $25/kg
* Molybdenum oxide price at around $10/lb
* Weak demand likely to continue into the summer period
By Harpreet Bhal
LONDON, July 16 (Reuters) - Molybdenum prices in Europe dropped to a four-year low this week, mostly due to diminishing demand from the stainless steelmakers, and are expected to fall further as industrial activity slows during the summer.
Spot prices for ferro molybdenum in Europe MLY-FERRO-LON have fallen steadily since the beginning of the year to hit their lowest levels since June 2009 at around $25 per kg.
Molybdenum oxide MLY-OXIDE-LON prices also reached their lowest since June 2009 at around $10 per lb.
Molybdenum is used in the manufacture of structural steel, stainless steel, chemicals and tools. It can withstand extreme temperatures, which makes it useful in manufacturing products such as aircraft parts, motors and electrical contacts.
Its prices reflect conditions mostly in the stainless steel sector, which is battling with global overcapacity, poor demand due to slow economic growth and falling prices.
Traders said customers have been buying in small quantities as many buyers have adequate stocks to meet immediate needs.
"Buying in smaller quantities is still happening, but I am not seeing a real push in demand that is needed to lift prices. It is mainly hand-to-mouth buying," a Europe-based molybdenum trader said.
Traders said prices could fall further as industrial activity in Europe slows during the summer.
"Demand is still okay in some places such as Germany, but overall the picture doesn't look good. The price could fall below $24/kg," another trader said.
Traders said the weak demand for molybdenum has driven producers to sell at low prices to avoid taking bigger losses should prices drop further.
"Producers are selling now even at these prices. People have little faith that prices will rebound anytime soon," a third trader said. (editing by Jane Baird)